US Stocks Edge Higher As Financials Climb; DJIA Up 29

DonnaKardos

NEW YORK (MarketWatch) -- U.S. stocks rose slightly Wednesday as the financial sector was boosted by capital-raising plans from several European banks, but disappointment over Monsanto's earnings weighed on materials companies.

The Dow Jones Industrial Average climbed 29 points, or 0.2%, to 12423 in afternoon trading. Earlier, the measure hit an intraday high of 12450.93, a level not seen since June 2008.

Leading the Dow's advance, Cisco Systems jumped 4.4% as investors continued to digest a suggestion from Chief Executive John Chambers on Tuesday that changes to the technology company's operations--and possibly cost cuts--would be coming. The Dow's other technology components also rose, with Hewlett-Packard up 2.4% and Microsoft up 1.2%.

The measure's financial components were also strong, with American Express up 2.2%, J.P. Morgan Chase up 1.1% and Bank of America up 0.6%. The gains followed a rally in European financial stocks after European banks, including Commerzbank, Intesa Sanpaolo and Deutsche Bank, announced plans to raise fresh capital. U.S. shares of Commerzbank rose 2.9%, while Intesa Sanpaolo jumped 5.8% and Deutsche Bank added 0.8%.

Investors are hoping that the capital raising by European banks will lead to improvements similar to those seen in U.S. banks after they underwent massive capital boosts of their own in recent years.

"Generally the financial markets in the U.S. have done better as these banks have gone out and raised equity," noted Peter Tuz, president of Chase Investment Counsel. "A similar thing could be happening over there."

The Nasdaq Composite edged up 0.1% to 2794. The Standard & Poor's 500-stock index tacked on 0.1% to 1333, with its financial sector leading to the update while the materials sector fell.

The materials sector was weighed down by a 4.8% drop in Monsanto. The agribusiness giant's fiscal second-quarter profit climbed 15% as sales of seeds and herbicides grew and margins improved, but revenue missed Wall Street expectations. In addition, seed margins fell short and the company left its fiscal 2011 guidance unchanged, below the consensus among analysts.

Monsanto's report comes as investors are starting to price in expectations for U.S. corporations' first-quarter results, with next week marking the effective start of the reporting season.

"People are pretty optimistic that earnings are going to hold up reasonably well," said Josh Feinman, chief global economist at DB Advisors. However, he said, "the one caveat is that profit margins are pretty wide so I don't know that there's a whole lot more room for expansion."

The euro climbed to its highest level since January 2010, supported by continued expectations that the European Central Bank will raise interest rates for the first time in nearly three years Thursday. The currency was also lifted by data showing German manufacturing orders climbed 2.4% in February, much stronger than the 0.5% increase that was expected.

In the U.S., data from the Federal Reserve Bank of Chicago showed manufacturing output in the Midwest region continued to rise in February, though at a slower pace than in the previous month.

The U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, fell 0.6%. Demand for U.S. Treasurys also fell, lifting the yield on the 10-year note up to 3.53%.

Among stocks in focus, American Superconductor tumbled 43%. The company, which makes wind-turbine gear and motors among other products, warned it expects to post a fourth-quarter loss and cut its revenue view for the quarter sharply as it said a customer refused to accept some shipments of components and parts.

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